BILL NUMBER: AB 145	CHAPTERED  10/10/99

	CHAPTER   821
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 8, 1999
	PASSED THE SENATE   SEPTEMBER 2, 1999
	PASSED THE ASSEMBLY   JUNE 1, 1999
	AMENDED IN ASSEMBLY   APRIL 5, 1999

INTRODUCED BY   Assembly Member Vincent

                        JANUARY 11, 1999

   An act to add and repeal Section 12209 of the Revenue and Taxation
Code, relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 145, Vincent.  Insurance taxation:  credit.
   Existing insurance tax law requires every insurer, as defined,
doing business in this state, to annually pay a tax on gross
premiums, as specified, at the rates and subject to the deductions
provided by law.  Except as otherwise provided, the rate of tax to be
applied to the basis of the annual tax in respect to each year is
2.35%.  Existing law authorizes a low-income housing credit against
that tax on the gross premiums of insurers.
   The Personal Income Tax Law and the Bank and Corporation Tax Law
allow a credit, until 2002, for specified taxable and income years in
an amount equal to 20% of a qualified deposit, as defined, made into
a community development financial institution, as defined.
   This bill would provide a similar tax credit, until 2002, for
purposes of insurance taxation.
   Existing law provides that when the laws of another state or
foreign country impose certain taxes or other amounts upon California
insurers, or their agents or representatives, the same taxes or
other amounts are imposed in this state upon the insurers, or their
agents or representatives, of the other state or country doing
business in this state.
   This bill would allow the credit created by this bill to be
allowed without any adjustment under those retaliatory tax provisions
by treating the credit as a tax paid for purposes of those
retaliatory taxes.
   This bill would take effect immediately as a tax levy.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 12209 is added to the Revenue and Taxation
Code, to read:
   12209.  (a) For each year beginning on or after January 1, 1999,
and before January 1, 2002, there shall be allowed as a credit
against the amount of tax, as defined in Section 28 of Article XIII
of the California Constitution, an amount equal to 20 percent of the
amount of each qualified deposit made by a taxpayer during the year
into a community development financial institution.
   (b) For purposes of determining any tax that may be imposed under
Section 685 of the Insurance Code on a taxpayer not organized under
the laws of this state, the amount of the credit allowed by
subdivision (a) shall be treated as a tax paid under Section 12201 or
Section 28 of Article XIII of the California Constitution.
   (c) Notwithstanding any other provision of this part, no credit
shall be allowed under this section unless the California Organized
Investment Network of the Department of Insurance, or its successor,
certifies that the deposit described in subdivision (a) qualifies for
the credit under this section and certifies the total amount of the
credit allocated to the taxpayer pursuant to this section.  The
aggregate amount of qualified deposits made by all taxpayers pursuant
to this section, Section 17053.57, and Section 23657 shall not
exceed ten million dollars ($10,000,000) for each calendar year.
   (d) The community development financial institution shall do all
of the following:
   (1) Apply to the California Organized Investment Network, or its
successor, for certification of its status as a community development
financial institution.
   (2) Apply to the California Organized Investment Network, or its
successor, on behalf of the taxpayer for certification of the credit
amount allocated to the taxpayer prior to accepting any qualified
deposit from the taxpayer.
   (3) Transmit to the taxpayer and the California Organized
Investment Network, or its successor, certification that a qualified
deposit has been accepted, the amount of the deposit or equity
investment, and the amount of the credit to which the taxpayer is
entitled, and retain a copy of the certification.
   (4) Obtain the taxpayer's California company identification number
for tax administration purposes and provide this information to the
California Organized Investment Network, or its successor, with the
transmittal required in paragraph (3).
   (5) Provide an annual listing to the board, in the form and manner
agreed upon by the board and the California Organized Investment
Network, or its successor, of the names and taxpayer's California
company identification numbers of any taxpayer who makes any
withdrawal or partial withdrawal of a qualified deposit before the
expiration of 60 months from the date of the qualified deposit.
   (e) The California Organized Investment Network, or any successor
thereof, shall do all of the following:
   (1) Accept applications for certification from financial
institutions and issue certificates that the applicant is a community
development financial institution qualified to receive qualified
deposits.
   (2) Accept applications for certification from any community
development financial institution on behalf of the taxpayer and issue
certificates to taxpayers in an aggregate amount that shall not
exceed the limit specified in subdivision (c).  The certificate shall
include the amount eligible to be made as a deposit or equity
investment that qualifies for the credit and the total amount of the
credit to which the taxpayer is entitled for the year.  Certificates
shall be issued in the order that the applications are received.
   (3) Provide an annual listing to the board, in the form or manner
agreed upon by the board and the California Organized Investment
Network, or its successor, of the taxpayers who were issued
certificates, their respective National Association of Insurance
Commissioners company number and employer's tax identification
number, the amount of the qualified deposit made by each taxpayer,
and the total amount of qualified deposits.
   (f) For purposes of this section:
   (1) "Qualified deposit" means a deposit that does not earn
interest, or an equity investment, that is equal to or greater than
fifty thousand dollars ($50,000) and is made for a minimum duration
of 60 months.
   (2) "Community development financial institution" means a private
financial institution located in this state that is certified by the
California Organized Investment Network, or its successor, that has
community development as its primary mission, and that lends in
urban, rural, or reservation-based communities in this state.  A
community development financial institution may include a community
development bank, a community development loan fund, a community
development credit union, a microenterprise fund, a community
development corporation-based lender, and a community development
venture fund.
   (g) (1) If a qualified deposit is withdrawn before the end of the
60th month and not redeposited or reinvested in another community
development financial institution within 60 days, there shall be
added to the "tax," as defined in Section 28 of Article XIII of the
California Constitution, for the year in which the withdrawal occurs,
the entire amount of any credit previously allowed under this
section.
   (2) If a qualified deposit is reduced before the end of the 60th
month, but not below fifty thousand dollars ($50,000), there shall be
added to the "tax," as defined in Section 28 of Article XIII of the
California Constitution, for the income year in which the reduction
occurs, an amount equal to 20 percent of the total reduction for the
year.
   (h) In the case where the credit allowed by this section exceeds
the "tax," the excess may be carried over to reduce the "tax" for the
next four years, or until the credit has been exhausted, whichever
occurs first.
   (i) This section shall remain in effect only until December 31,
2002, and as of that date is repealed.  However, any unused credit
may continue to be carried forward, as provided in subdivision (h),
until the credit is exhausted.
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
